Petrobras moves forward with refinery partner talks

Thursday, February 8, 2018

Brazil's Petrobras is moving forward with partner negotiations to unlock projects in the refining sector, the state-run firm's CEO, Pedro Parente, told journalists at a meeting in Rio de Janeiro.

Without providing names, Parente said he had a "positive meeting" with a company to discuss the conclusion of Comperj's first refining train and natural gas processing unit (UPGN), in addition to revamping its refining park in Rio de Janeiro state.

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"I would say these conversations should have a closing in three months. If not, they are not likely to go ahead," Parente said.

Petrobras is reportedly in talks with China National Petroleum Company, which is already a partner of the Brazilian NOC in the Libra project, holding a 10% stake.

In July 2017, both companies signed a memorandum of understanding to jointly evaluate opportunities in Brazil and abroad in key areas of the oil and gas sector.

According to Parente, seeking partners for Petrobras' refining business has proven to be more complicated than expected. "We are talking about assets which are inside the holding, non-independent."

On Wednesday, Petrobras informed the market that local antitrust agency Cade had approved the sale of the PetroquímicaSuape petrochemical plant and Citepe textile company to Mexico's Alpek.

The US$385mn transaction is subject to the execution of an agreement to address competition-related concerns raised by Cade.


Regarding the Pasadena refinery sale announced this week, Parente said there is a "special interest" in an area on the Houston Ship Channel that is included in the sale package.

"It is still early to talk about the value for Pasadena but we do not expect it to be low", he answered journalists who raised the issue of environmental liabilities associated with the refinery.


Pasadena is part of Petrobras' 2017-18 divestment plan, which involves the sale of US$21bn in assets.

According to Parente, the company's potential divestment portfolio amounts to US$40bn, with an extra US$5bn that could be added in case the deleveraging goal is not reached by December this year. "It is a protective measure," he said.

Parente also said that a recent US$3bn class action settlement would not affect its deleveraging process or investment plans.

With current Brent prices at around US$70, Petrobras' net debt-Ebitda ratio is expected to reach two times by December this year, lower than the 2.5-goal, said Parente.


The CEO also commented on a recent statement by São Paulo state governor and potential presidential candidate Geraldo Alckmin, who said Petrobras should be privatized.

"This is not a discussion that makes sense for us at this moment as we are focused on reducing the company's leverage. Besides that, it is important to have in mind that Brazilian society does not want Petrobras to be privatized."


Regarding output prospects, Parente said the next production leap will come in 2019 when Petrobras' new offshore platforms scheduled to come online this year will be ramping up.


Parente's term as CEO is technically scheduled to end in April 2019.

"It is early to talk about the future. We are having presidential elections this year and the result is unclear," he said.